Wednesday, January 20, 2016

Definition,
Glut: The
impression that we are “drowning in a sea of oil” is not exactly
right. We have a bit too much capacity, true. The IEA says that the
world is producing about 99.5 million barrels a day (mbd) and using
about 97.5 mbd. Makes doing the math pretty easy – we've got about
1.5% too much oil right now. The gap is expected to grow a bit, with
demand growing about 1.2 mbd this year and production remaining about
1.5 mbd above demand, which will “put storage infrastructure under
pressure.” The glut will disappear, along with cheap gas at the
pump, once those in the worst financial shape (most likely those with
the most expensive to produce oil) drop out. Closing 2 mbd in
production would do the job. Don't expect volunteers.

Full
Disclosure:
The real question about the Saudi “plan” to sell part of Saudi
Aramco is not why they might want to do that – they've already
burned through 15% of their foreign reserves – but how much it
would be worth. A public offering would require complete and
detailed disclosure of their reserves – something they have
strongly resisted for decades. And most of the world suspects that a
fair percentage of the claimed 260 billion barrels are mythical.

Yes,
and No: Yes,
there is a grade of crude oil in North Dakota that is pretty much
worthless – it is “North Dakota Sour” and it is full of sulfur,
a thick and acidic sludge. But it is also not worth talking about,
unless you own part of the 15,000 barrel a day production. Exxon
spills more than that every day. Even if you include the production
of South Texas Sour ($13.25 a barrel) and Oklahoma Sour ($13.5o) all
you've got is an ignorable footnote.

Our Motto

Keep fightin' for freedom and justice, beloveds, but don't you forget to have fun doin' it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin' ass and celebratin' the sheer joy of a good fight, be sure to tell those who come after how much fun it was.